U.S. drillers this week add most oil rigs in 16 mths -Baker Hughes

Reuters Staff

4 Min Read

Nov 18 (Reuters) - U.S. oil companies added 19 drilling rigs
this week, the biggest hike since July 2015, as shale producers
cautiously redeploy cash amid OPEC's plans to curb production
and after Donald Trump's presidential election victory.
Drillers added 19 oil rigs in the week to Nov. 18, bringing
the total count up to 471, the most since January, but still
below the 564 rigs seen a year ago, energy services firm Baker
Hughes Inc said on Friday. RIG-OL-USA-BHI
Since U.S. crude prices recovered from 13-year lows to
around $50 a barrel, drillers have added a total of 155 oil rigs
in 22 of the last 25 weeks.
It is the biggest recovery in the Baker Hughes oil rig count
since a global oil glut crushed the market over two years ago.
The number of oil rigs plunged from a record high of 1,609 in
October 2014 to a six-year low of 316 in May as crude prices
collapsed from over $107 in June 2014 to near $26 in February
2016.
U.S. crude futures were trading above $45 on Friday,
putting the contract on track to rise for the first week in four
on hopes that the Organization of the Petroleum Exporting
Countries might agree to limit production at a meeting at the
end of the month.
In the longer term, Trump is expected to be an advocate for
oil and gas drilling, who will slash regulations and encourage
new energy industry development.
With oil prices expected to rise with a projected tightening
of supplies and a leaner, more efficient U.S. shale industry,
producers said they will follow through on plans to boost
spending on new drilling.
"You're starting to see a little bit of light at the end of
the tunnel," Ryan Lance, chief executive of ConocoPhillips
, the largest independent U.S. oil producer, told Reuters
last week. "We're beginning to put capital back to work, but
we're being cautious."
Futures were trading near $49 a barrel for calendar 2017
and near $51 for calendar 2018.
"Natural gas and oil drilling activity should end the year
within a few rigs of 600," James Williams, president of energy
consultant WTRG Economics in Arkansas, said this week in a note.
The combined oil and gas rig count was 588 in the week ended
Nov. 18, according to Baker Hughes data. Most wells produce both
oil and gas.
Analysts at U.S. financial services firm Cowen & Co said in
a note this week that its capital expenditure tracking showed 18
exploration and production (E&P) companies, including Occidental
Petroleum Corp and ConocoPhillips, planned to increase
spending by an average of 39 percent in 2017 over 2016.
Cowen said that forecast 2017 increase followed an estimated
48 percent decline in 2016 and a 35 percent decline in 2015 for
the 65 E&P companies it tracks.
That increased spending should boost the total number of oil
and gas rigs to a forecast average of 634 in 2017 and 732 in
2018 from a projected 514 in 2016, Cowen said.
That compares with an average of 978 oil and gas rigs active
in 2015, according to Baker Hughes data.
(Reporting by Scott DiSavino; Editing by Marguerita Choy)